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New plan moves personal property tax to forefront

It looks like local communities will be made whole on personal property tax after all.

After a year of negotiations between lawmakers and business and local government groups, Lt. Gov. Brian Calley announced last week that use tax revenue will be used to fully reimburse local governments if the local personal property tax paid by some businesses is repealed on the August ballot. Calley has been the point person for the governor on the issue.

The plan, as originally proposed, would have guaranteed only 80 percent reimbursement, but it would have allowed communities to seek a special assessment to make up the difference.

The Michigan Legislature repealed the personal property tax during the lame-duck session in December 2012, if approved by voters this August. That gave supporters of the repeal time to build their case, and opponents time to work with the administration to ensure that the loss of revenue the tax produces does not cause shortfalls in municipal budgets around the state.

Full reimbursement is defined as the amount of money local governments were receiving in December 2012.

When the phaseout of the PPT begins in 2016, the state will dedicate $380.6 million to reimburse local governments. By 2023, once the tax is fully phased out, the state's contribution goes up to $548 million.

The diversion of the use tax won't hurt other recipients of state funds, Calley said, because beginning in 2016 a series of major tax credits for business given out under the Granholm administration will begin to expire.

Right now, those tax credits cost the state between $500 million and $600 million each fiscal year in lost tax revenue, but that will diminish over the next several years. "This plan will work," Calley said.

A bipartisan, 10-bill package (Senate Bills 821-830) making the change is expected to be approved by the full Senate this week. After approval in the Senate, the House is expected to move just as swiftly, with the goal of having the bills in front of Gov. Rick Snyder by the end of the month. Then the work begins on educating the public about the August vote.

Business groups had already begun pouring money into a fund to mount a campaign in support of the ballot question. But with passage of these bills that ensure local governments will be made whole, their lobbying organizations are now in support, making any organized opposition to the proposal negligible.